Platform to share my experience and thoughts with HR professionals and top management and contributing a little towards growth of HR Community. This is the place for all levels of HR professionals, a beginner, mid level and top level HR professional. All can learn and share their experiences and thought for other to learn.

It includes both commercial and non commercial
establishment like educational institutes etc.

Only Basic and Dearness allowance should be
considered as wages for the purpose of Gratuity.

Gratuity payment formula:

Example: If an employee leave
company after 10 years and his last Basic + Dearness allowance is 10000 then
his gratuity will be paid as per following formula.

(10000/26)*15*
10

Please note that above formula
will remain same irrespective of employee working in 5 days a week establishment.

FAQ 1: Can an employee claim Gratuity even before
completion of 5 years?

Yes, An employee can claim gratuity even before completion
of 5 years in followings cases:

Death (to his nominees)

Disablement

But the quantum of gratuity will be as per act.

FAQ 2: Can employer forfeit Gratuity, even if
employee has completed 5 years?

Yes, employer can forfeit gratuity even if employee has
completed 5 years in following cases:

If the services of such employee
have been terminated for his riotous or disorderly conduct or
any other act of violence on his part, or

If the service of such
employee have been terminated for any act which
constitutes an offense involving moral turpitude, provided that such
offense is committed by him in the course of his employment.

Please note that above act should have been committed by
employee during his employment. There should be a proper enquiry held after
which employee was found guilty for aforesaid act or misconduct. Once proved
guilty, employer should issue termination note to employee describing about his
misconduct.

FAQ 3: Gratuity Payment when employee has
completed 4 year and 240 days in 5th year?

This is one the most frequently asked question and there are
various views available on it.

As per Section 2A of Gratuity Act (Continuous Service), an employee is eligible for gratuity if he has completed:

(i) one hundred and ninety days, in the case of an employee
employed below the ground in a mine or in an establishment which works for less
than six days in a week; and

(ii) two hundred and forty days, in any other case;

Earlier, I was also of opinion that gratuity can only be paid once an employee completes 5 years of continuous service which is not the case now as state above.

Following is the complete draft of the Section 2A of Gratuity Act for better understanding:

Section: 2A
Continuous service.

For the purposes of this Act, -

(1) an employee shall be said to be in continuous service for a period if
he has, for that period, been in uninterrupted service, including service
which may be interrupted on account of sickness, accident, leave, absence
from duty without leave (not being absence in respect of which an order [***]
treating the absence as break in service has been passed in accordance with
the standing order, rules or regulations governing the employees of the
establishment), lay off, strike or a lock-out or cessation of work not due to
any fault of the employee, whether such uninterrupted or interrupted service
was rendered before or after the commencement of this Act.

(2) where an employee (not being an employee employed in a seasonal
establishment) is not in continuous service within the meaning of clause (1),
for any period of one year or six months, he shall be deemed to be in
continuous service under the employer -

(a) for the said period of one year, if the employee
during the period of twelve calendar months preceding the date with reference
to which calculation is to be made, has actually worked under the employer
for not less than -

(i) one hundred and ninety days, in the case of an employee
employed below the ground in a mine or in an establishment which works for
less than six days in a week; and

(ii) two hundred and forty days, in any other case;

(b) for the said period of six months, if the employee
during the period of six calendar months preceding the date with reference to
which the calculation is to be made, has actually worked under the employer
for not less than -

(i) ninety-five days, in the case of an employee employed
below the ground in a mine or in an establishment which works for less than
six days in a week; and

(ii) one hundred and twenty days, in any other case;

Explanation: For the purpose of clause (2), the number of days on
which an employee has actually worked under an employer shall include the
days on which -

(i) he has been laid-off under an agreement or as
permitted by standing orders made under the Industrial Employment (Standing
Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947
(14 of 1947), or under any other law applicab1c to the establishment;

(ii) he has been on leave with full wages, earned in the
previous year;

(iii) he has been absent due to temporary disablement
caused by accident arising out of and in the course of his employment and

(iv) in the case of a female, she has been on maternity
leave; so, however, that the total period of such maternity leave does not
exceed twelve weeks.

(3) where an employee employed in a seasonal establishment, is not in
continuous service within the meaning of clause (1), for any period of one
year or six months, he shall be deemed to be in continuous service under the
employer for such period if he has actually worked for not less than
seventy-five per cent of the number of days on which the establishment was in
operation during such period.

FAQ 4: Gratuity payment in case employee has
worked for more than 5 years with same employer but in different establishment?

Let’s take an example, that if an employee has worked in a
company ABC for 3 years and due to some reason, he has been moved to company
XYZ under same management. Employee got his Full and Final from ABC Company but
not the gratuity amount as he has not completed 5 years there. He has spend
another 2.5 years in company XYZ and resigned. At the time of his Full and
final, will he be eligible for gratuity?

Answer is yes as both the companies are under same management
and employee has completed 5.5 years to gather in both companies.

FAQ 5: Do company need to take insurance policy
against LIC? Is it mandatory?

Gratuity payment is responsibility of employer. Nowhere in
act, it is mentioned that employer need to take any sort of insurance policy
for gratuity payment. Hence it is up to employer whether they want to take
insurance policy to cover its gratuity liability.

There are various benefits of taking insurance policy for
insurance company to cover gratuity liability, let’s say LIC:

Employer ensure that its liability is taken care
by giving regular premium to LIC

Employer get tax rebate against that payment.

LIC also do life insurance for each employee
hence in case of employee’s death, employee family get sum insured amount apart
from gratuity.

FAQ 6: How much gratuity amount is exempted from
income tax?

FAQ 7: Can a company refuse to pay gratuity due to
financial Loss to employees?

No, even if company is not doing financial well, company is
bound to pay gratuity amount.

Company should ensure that it pays gratuity within 30 days
from the date when gratuity become payable to an employee. Also it is
responsibility of employer to notify employee about his gratuity payment even
if employee do not apply for same. It is employer duty to pay the gratuity.

FAQ 8: Will an employee resigning from service or
retrenched by employer will be eligible for Gratuity?

Yes, if they are satisfying the criteria of completion of 5
years. In case of employee who has been retrenched after 5 years of continuous
service will get both gratuity and retrenchment benefits.

FAQ 9: Gratuity in case of contractual employee.
Who will be responsible to pay gratuity?

In case of contractual employee, contractor is liable to pay
gratuity but if contractor do not pay gratuity to employee then principal
employer can be directed to pay the gratuity amount.

FAQ 10: Will trainee be entitled for Gratuity
after completion of 5 years?

FAQ 11: Company making gratuity as part of CTC is
correct?

This is another most debatable topic. Basically CTC stands
for, cost to company and every company takes it different way. Hence, it is up to
company whether they want to make it part of employee CTC or not.

There are two views:

One, employee become eligible for gratuity only after
completion of 5 years so how come company can make it part of employee CTC and
what if employee do not complete 5 years and leave the company before.

Second, as it is liability of employer to pay gratuity to employee
in two cases: 1) when employee competes 5 years and 2) in case of death and
disablement irrespective of completion of 5 years hence employee should make it
part of CTC especially when employer has taken insurance policy to cover gratuity
liability.

FAQ 12: What is the ceiling of gratuity amount
payment?

It is Rs 10 L. In case an employee gratuity amount is more
than 10 L then company is bound to pay max 10 L. In case company want to pay
more than 10 L then company can pay it as performance bonus or ex gratia. Click here to download the notification for same.

FAQ 13: How to treat number of months for the
purpose of gratuity calculation after completion of 5 years?

For example, if an employee has worked for 5 years and 7
months then for the purpose of gratuity payment, 7 months will be rounded off to
an year and he will get gratuity for 6 years but in case employee has worked
for 5 years and 5 months then he will be eligible for 5 years gratuity payment
only.

Important Note:Dear Friends, Due to so many comments on this blog post, I believe further comments are not visible and my replies to those comments in not getting registered. Hence request to all of you to ask your questions on our HR Forum. Link of the forum is as below:http://hrsuccesstalk.com/forum/

I have one question. If a company puts the Gratuity amount as part of CTC and also deducts that amount every month from a person's salary, then if the employee resigns before completion of 5 years, can he claim that Gratuity amount in final settlement?

As such Gratuity is like a thanks giving from Company's side for a person who has dedicated minimum 5 years of service for the betterment of the company and so should not be considered as part of CTC.

But nowadays, the accounts people fool the management and make them believe that this should be part of CTC since it is a cost to the company.

If company refuses to give the deducted gratuity, at final settlement, can the employee go to court for this?

Dear Sir,As you mentioned in earlier posts and law itself says it, that in case of completed years of service months shall be rounded of to the integral value ,then why cant we take this as reference to claim gratuity on completion of 4.6 years of services.

Hi,Can you inform me if the employer is bound to pay gratuity if the number of employees fall below 10. For e.g. in the FY 10-11, if there were 15 employees, and in the FY 11-12, there are only 9 employees, is the employer still bound to pay gratuity to any of the one employee out of 9 employees resigning in the year 11-12 who has completed 5 years of service?

Thanks Mr.Govind,For such nice posting on Gratuity. You could able to cover almost all area of query.I could able to have a nice clarity on the same. Once more thanks a lot.I would like to have a small query on the same.One of my friend was on management cadre and left the company on allegation on integrity but neither any proof along nor any inquiry was conducted.In this regard even no letter was also issued to him. Based on verbal communication he discontinued attending the job.Please be informed that no resignation/relief or termination was given from either side.He has completed 7 yrs of his duty with the Organisation.As per law he should get the salary for the working month ,Gratuity for 7 yrs,one month notice period at least.When he approached to factory management where he was working for this they are saying we will take approval from H.O and will settle the same.By this way they had taken almost 2 years.Can the claimant take help of court or where he should take help for his claim.Kindly be informed that there is no written or any inquiry was conducted and this was result of zealousy with one of senior peer working with him.Please guide how to resolve this.

Hi,this blog provides complete information about gratuity and it clears all the doubts.I woul like to thank to you to share such a valuable information.i would request to you share also some more topics of hr..

Dear Sir,Thanks for sharing such valuable & essential information in r/o Gratuity. This 13 FAQ may genuinely clear everyone's doubts pertaining to Gratuity especially who are engaged in Labour Law & HR profile. Thanks Once Again!!!!

However, I would like to know about my query posted below:

One of my friend was working with XYZ company on probation period for 1 year and after completion of probation period he got confirmation letter from Management. His total tenure of service was 5 years 3 months. (Including Probation Tenure)

In view of above scenario I would like to know about whether he is eligible for Gratuity? Should we consider Probation period/ training period etc. for completion of 5 years of service while computing Gratuity Payment to the concerned employee?

Hi Govind, Thank you for sharing your knowledge and learnings in the above which has also brought out queries from others who have read the same. This gratuity being a part of CTC has boggled me for far to long, later realised it being the CTC and is not Salary structure. Why do we keep mixing up these two? Thank you once again and look forward to such informative post

Rightly said, we should not mix salary and CTC. Every employee should see what is the in hand salary and other benefits which are either reimbursable in future like LTA, medical reimbursement or reducing his other liability by any way like medical and accident insurance etc.

Hi Govind, The post is very informative and I am sure that this will be resourceful to solve the mystery behind the "Gratuity Payout". I will definitely forward this link to many of my colleagues as they are still not sure about the concept and how it works, calculation etc.,

I do, however, have one question though.

Suppose if an employee has worked in a company for 6 complete years, still continuing in the same company. Can he claim the Gratuity while he continues to work in the same organization?

Also, can he again claim his Gratuity after working for another 5-6 more years in the same company?

In short, in a 11-12 years of continued work experience in a same company, can an employee claim his Gratuity twice?

Dear Negi,I want your opinion in this case. A company has multiple offices in multiple locations and wants to close specific locations offices, citing that ROI is nil, and asking its employees to move out , search for jobs, etc.. In this case, what are the benefits the employee can claim from the company..? Some employees are lucky to get a job, and others are not... What is the legal solution in their case.. Pls clarify. Thanks..

they can claim whatever is applicable as per law like retrenchment compensation if employee fall under definition of retrenchment compensation, gratuity if applicable, notice period as per appointment.

For more answers on this subject please post your query on HR SUCCESS Forum. Link is http://hrsuccesstalk.com/forum/

My previous employer had paid gratuity to me even though I had not completed 5 years since he had shown it in the CTC. My current employer does not do this. However, during negotiations they had conveniently shown this as part of the CTC. If an employee is only eligible to claim/receive gratuity after 5 years of uniterrupted service, how can they show it in the CTC in the 1st year till the 5th year? If they show it in the CTC, are the employers not lying to the employee? An amount promised to an employee every year cannot be denied to him. I would like to know your opinion on this.

Thank you so much for the informative post. Shall go through your other posts to gain valuable information.I am currently working as aa site HR & Legal officer at a factory. Would be glad if you add me to your mailing list so that all recent updates can be shared.My e mail id is - soham.majumdar8@gmail.com . Looking forward to hearing from your end.

I have already shared my views on this in FAQ 11. Nice to hear that your previous employer has paid you gratuity amount even if you have not completed 5 years. Very rare example. Majority of company do consider gratuity as part of CTC due to their liability.

First of all thanks for appreciation and good to know that this blog is helping you to grow in your career and get more and more information about various aspects of HR. You can register yourself to mailing list to get updates on regular basis.

There is a text box on the right side of this page (Just below my profile details) where you can mention your email id and then click SUBMIT. Simple

Is it compulsory to take Professional Tax Registration for all those location where PT is applicable since the registered office of the company is in Non PT location?The registered office of my company is in New Delhi but there are some employees who is working at three of those location where PT is applicable.Should we deduct Professional Tax for the same?

Dear Mr Negi,Thank you so much for the informative post. I have completed 5 year in my current organization and I am not sure how much I will be getting the gratuity amount after my last date with the organasation.Please let me know how our gratuity amount should be calculated.As per gratuity act, it should be = Last drawn salary(basic+DA)*15/26* number of years.We have the salary structure like this in our organization:BasicHRAConveyance AllowanceSpecial AllowanceSo my question is that how my gratuity amount should be calculated , It should be Basic pay*15/26*5

You last post or method to calculate Gratuity is the most simplest and Best way to do it.

However, The reason I'm on this Blog is a doubt which I had in my mind, I had recently resigned from my current organization and I'm about to complete my 5 Years during my notice period. Will I be eligible for my Gratuity or not and could an organization deduct LWP(Leave without pay) from total 5 years of working days and deny me gratuity as I had gone on a leave for a month during my 2nd year in service.

Excellent informative post. Thanks a lot for this. was wondering why the act has decided 5 years as the eligibility for getting gratuity. I srongly feel the act should be amended or some change should be made and this should be 2/3 years max. 5 years is way too long these days.and since gratuity is part of CTC in most companies all the more it shuould be paid even after 2-3 years of completed service in the company.

Dear Sir,In a span of 16 years 11 months of service(as calculated by company), I have 2 years with LWP of in two consecutive years 141 and 181(approved LWP, no break in service). I was paid gratuity reducing these 2 years from total service. Apart from that they ignored 11 months also.

So they paid me for 14 years. Shouldn't I get gratuity for 17 years?(after considering 180 days in a year minimum attendance)

Thanks for this article. I would like to ask you, in casee the company closed down business activities & employee have worked for 3 to 4 years. can he claim the gratuity for that period. the employer is terminationating employee do to close the business.

Hi Negi, I was working with a software industry for more than 5 years. After resignation, company didnt pay gratuaity saying company is not doing well. Then i submitted form "I" and after one month i submitted form N with all other documents. After 5 hearing the controlling authority has awarded the money. But still the company is paying the money. What is the next step?

Hi Sir,First of all Thank you much for sharing such true knowledge with us, which is a rare incident in online world now days. I appreciate all your efforts and time you've invested in this article. Sir I am student from Delhi 25 years old doing my masters from delhi university. I've had major concerns regarding this gratuity act, My father passed away last year aug 2012 and my mother passed away in 2008. My father was Oriental bank of commerce employee , he was promoted on officer grade when he passed away. Sir the concerned is in his PF he did mention the nomination of my mother and myself however in his gratuity the bank authorities are saying there isn't any nomination mentioned in the gratuity records. hence in this case bank people are saying that myself and my grandmother would be equivalent nominee and the amount would be shared between the two, however i do not know anything about the whereabouts of grandparents I've not seen them till date and my parents mentioned that they've seperated from my grandparents soon after their marriage. So i don't know anything about them however they are still alive. now on this whole situation bank people are saying that it's your personal family issues bank has nothing to do with it, either you bring your grandmother and we would need her authorization and then sum would be divided between the two of you on which i have no issues , or else wait for period of 7 years if you are unable to get hold of her. Sir I request you kindly shed some light on this matter I'll be highly obliged.Thanks

I have worked in a construction company having employees more than 200 members. I have worked for 13 years. Now the management is forcing us to resign and rejoin in the same company. But they are not willing to give gratuity. Now if I go to court for gratuity they will not rejoin me in the company. Please help me.Ramesh K.

My query is, if the employer is including gratuity contribution in CTC and also deducting gratuity from employee's salary, then while calculating taxable salary, the Employer's contribution will be taxable? Same question will be for PF contribution. Thanks in advance.Madhura.

My company has reduced the basic salary in the latest revision, with a view to save the gratuity payable to employees. Most employees in my company have spent more than 5 years, and the company seems to have taken this step to save on the gratuity amount which would amount to crores of rupees.

Almost everyone of the hundred odd employees, from a total of 600 employees who are eligible for gratuity when they leave would lose more than one lakh rupees even at the lost levels.

This company was taken over by a PE firm in the recent past, and this has been done by the firm which toom over the company.

Employees who have complained about this have been threatened with termination of service.

Please suggest what are the options that we have? Can a company reduce the basic salary, like this.

Thanks for such a nice post. I am working with an It company for almost 4 years now. Currently the company says that you put your papers and join another company who is under same management for next 5 months. And again after 5 months you can join back the original company. After I join the original company again they will deduct amount of my gratuity from salary. My concern is where is the employee getting benefited for their 4 years of service, though company claims that they cannot pay gratuity for these 4 years as they have not deducted any gratuity from my salary.

Below are my questions1. Is this move by company right or wrong according to law?2. What further steps i should take so that my interest is not harmed?3. Can I completely reject the offer that company is putting in front of me as this is no where beneficial for me?

There is no question of gratuity being taxable or not if employer has not paid it. Assuming that gratuity is only part of your CTC and you have not been paid by employer, gratuity is not earned yet hence it is not taxable. When employer will pay you gratuity after 5 years and you leave, it is non taxable till 10 L. Request you to post your further queries on www.hrsuccesstalk.com

1. This move is absolutely wrong.2. Well, you need to write an application your employer about the same and ask about your gratuity if you change your company and then come back after 5 months. You should primarily ask what is the reason for doing so? 3. Yes, Not only gratuity but what about your PF fund.

Also note that if an employee move from one company to another which is under influence of same management and employee has completed more than 5 years of continuous service in both companies then at the time of leaving the company employee can claim its gratuity and employer need to pay that else court is the next option.

Also I assume that company is at fault that they didn't deduct gratuity in past year of my employment and now to hide this mistake they want me to shift to another company so when they say that they cannot pay gratuity because they didn't deduct it from my past salary so are they correct at their part?

Company can not deduct any amount from employee salary as gratuity. It is employer obligation and liability and employer need to ensure to pay it to employee. You must be saying that they have not included it as part of your CTC. In that case also it doesnt matter. They have to pay gratuity in any case if you complete 5 years of continuous service.

Dear Mr Negi, This is indeed the most comprehensive Q&A on Gratuity and clears a lot of doubts on the same.I also have a question regarding the same:Our company has kept basic limited and introduced various allowances, although some allowances like conveyance, books etc are helpful in tax saving, allowances like Special allowance which is taxable are purely to keep the basic lowfor Gratuity calculations, shouldn't these allowances also be taken into consideration.By keeping these heads under the salary structure, isnt the company cheating on the actual basic. eg my salary is 2Lakh pm, but my basic is only 30k pm.Also as per IT rules, all these various heads except the reimbursable come under the heading of salary.

Hi!I had worked with a company where I complete almost 06 years.And I get clearance on 22nd april 2013 but till date I had not received my gratuity amount.So, can you please tell me is there any specific time frame to get that gratuity amount.

hii hv worked from 26.02.1976 to 31.05.2013 and got retired. my last drawn consolidated (basic+da) was 27405. what is the gratuity calculation? and is there any rule [15/26 for <30 years and 30/26>30 years]?

Hi GovindThanks for your response. I was working with a company X registered in India and now I'm moving to company X registered in USA. I'll be a permanent employee in US from now => I'm no longer an employee of company X registered in India. Am I still not eligible for gratuity. Appreciate your response.

I was an employee of DPS,Jamshedpur for more than 10 years.Last March I was resigned from the job.Although I was a permanent employee & in my contract it's clearly written in the case of resignation / termination there will be three months notice from either side but the management breached the contract & condone / relaxed us from the three months notice & said you will have to leave & given us the release letter.1.My question is that shall we claim for the three months notice period salary along with earned leave encasement.2.How we'll get our Gratuity.Because the management is saying they will not pay us the Gratuity in any condition.

Please give us guideline how we can proceed to apply for our gratuity.

I resigned from an organisation whilst onsite after serving 8 years, and basic that I was getting in India was the least so that I don't fall under tax bracket, whereas I was paid full salary onsite in local currency.. Now when I got my gratuity it was the least basic that I was getting in India that was considered for calculation ! .. Is this correct ?

Thanks for the very informative piece on gratuity. I completed more than 5 years of service and resigned. I have not received gratuity from my company even after one month. No reply is given to my application for gratuity. Can you pl. inform where to lodge complaint for non-payment of gratuity? My location is Gurgaon.

I wanted inquire if I have worked in a company, ABC for two years from 2006 -2008, and then rejoined the company with a different team in 2009 till present, which amounts to 4.5 years , am I eligible for a gratuity?

Hi,I have joined in a government firm in the year 2007 as contract staff on consolidated pay. In 2008 I have got promotion and joined in the higher post without resigning or relieving from the previous post.In 2011,on completion of my 3 year contract, they relieved me and gave me the relieving letter.After 3 days break,they issued a fresh appointment without conducting any test or interview and the salary offered was same as my last month salary.I am still in the same company.My doubt is that whether I am eligible for gratuity as I have completed 6 years of service in the same company?

I joined company X in India, and after a few years they transferred me to their USA branch. After 5+ yrs I resigned from company X directly from USA (without returning to India). My salary in USA had just one component called "base salary". I also have a Indian compensation package, which is just on paper. It would be used if I had return to India to continue my job. While in US I dont get that Indian salary.Will I be paid gratuity based on the US "base salary" or the basic pay in Indian package? The gratuity act 2010 says "last drawn" salary. My "last drawn" salary from company X in the US salary.

Dear Govind, I have only 3 days break in my rejoining and it was intentionally created by my company.There was no interview or selection process conducted for this. My question is whether I can move to labor commissioner for Justice, because again after 4 years or 3 years, they will repeat the same and create break in our service.

Thanks for the article and more importantly for the answers to all the posts. Extremely helpful and informative.

I too would like to bother you with a question. I have recently moved to the UK offices of a company after being with this company for 10 years in India. Effectively I understand that I am not entitled to a gratuity payment at the moment as I have not resigned from the Company. However if I do choose to resign from the UK offices and move to a different company in France, will I still be entitled to the Gratuity amount that was accumulated while I worked for the 10 years in India?

Dear Mr.NegiYour post is really valuable considering little awareness that people have about gratuity. There is one point on which I am little concerned and that is Insurance for gratuity. While going through the Act I found that Insurance is compulsory (for entities not having their own separate gratuity fund). Pl. advise if it is compulsory in your opinion. Also It would be great if you could tell if any registration with any government department is required.

Registration with insurance company is not compulsory. Company should simply book liability of gratuity in accounts book. There is no requirement of registration of company with any govt organization for gratuity.

HiI joined a IT company on 15-Mar-2004 and left the company on 10-Nov-2008. If i calculate the total time it will be 4 yrs 241 days. I read if you have worked for 240 days in the 5th yr one is eligible for gratuity(or 240 each year)? Am I eligible for gratuity? Can I claim it now though its almost 5 yrs back? I am sorry this might be similar query but i have read so many articles that I am confused. Some article say 190 actual working days(not including week ends) for people working 5 days a week.

Hi, Mr. NegiI joined an IT company on jan-2008 as an intern with bond period of 2 years with company. though it was contractual job since 2008 serving on actual payroll of company. As am serving continuously in same organization with regular increments from jan 2008 till date. I joined as an intern initially for 2 years after that got promoted to Contract Engineer level I,II,III and so on.. Now i am selected as project engineer through Open channel(examination),but our HR Dept told us to Resign from my current post which is same as Project engineer with hiked salary. Since my service is continuous from Jan 2008 why i have to resign from my current post? Secondly, are we eligible for gratuity as i have served more than 5 years in same organization.

Dear Mr. Negi,I joined an Education Group on 14-July-2008 and on 10-July-2013, I received an email with a Inter-Office Note dated 9-July-2013 attached stating that my services are not required any more. Just 5 days before completion of 5 years.I also wish to mention that- I was on approved Summer Vacation from July 1st to July 21st, 2013. - I still have 10.23 leave balance - This termination is not at all on the basis of any offensive act.This act clearly indicate an attempt to avoid Gratuity.Kindly guide me about how to claim Gratuity.Regards-Vijay Negi

Hi,As we know that gratuity liability can be funded either through IT approved gratuity fund or Group Gratuity Scheme of Insurer.Group Gratuity scheme having an advantage of providing gratuity on Anticipated service(Enhanced Death Benefit)through OYRTI (One Year renewable Term Insurance).My Question is does IT approved gratuity fund also provide gratuity for anticipated service or not. and what about Insurance?

well, my company policy is 4.8 yrs. of continous service to be eligible for gratuity.i joined in jan 2009, and am currently serving notice period. i will complete 4.8 yrs in first week of september, and will leave the company in second week of september. so will i be eligible for gratuity... is my notice period also counted in gratuity period?

Can an employee claim the gratutity amount after 10 yrs from leaving the service.Do we need to submit the forms for claiming the gratuity to the employer only or do we need to submit elsewhere.Do the employer has to separately get registered for Gratuity.

i WANT TO KNOW IF THE COMPANY IS NOT WILLING TO PAY GRATUITY THEN WHAT WILL BE THE PROCEDURE TO CLAIM IT?

SECONDLY, I WANT TO KNOW IF THE COMPANY IS WILLING TO PAY THEN WHEN THE EMPLOYEE COMPLETES 5 YEARS AND HE/SHE CONTINUE TO WORK IN SAME FIRM WHAT IS THE RATE OF PAYMENT OF GRATUITY PER YEAR MEANS DO THE XCOMPANY NEEDS TO MAINTAIN ANY RECORD FOR IT

I WANT TO KNOW IF THE COMPANY IS UNDER PROCESS OF REGISTRATION FOR THE GRATUITY AND COMPANY MAKES THE DIRECT PAYMENT TO LIC INSTEAD OF APPROVED GRATUITY FUND.THE AMOUNT WHICH WE DEDUCT AND PAID DIRECTLY TO LIC IS ALLOW UNDER THE INCOME TAX????????

if an employee completed more than five years & he is not coming in company since January'13 & then he came in July'13 & submit his resignation. Then what will be his last drawn salary a). salary payable to him in January'13 b) present salary in July'13 which is higher than Jan'13 due to increase in DA?

Dear Govind, I have completed 5 years and 5 months in a company where i work due to some unavoidable circumstances i need to change my job. if i give a months notice to the Company. and serve the notice i will be completing 5 yr and 6 months, Ie i will be entitled for 6 years Gratuity. But in the case if the company relieves me from the job before the notice date. will i be eligible for the gratuity of 6 years.

It is legal obligation to pay gratuity if an employee completes 5 year. As soon as employee who has completed 5 years leave the company, employer should automatically pay his gratuity preferably along with Full and Final.

Employer can either get gratuity liability covered through LIC or make a provision in the accounts books for gratuity.

Can employer pay in more than five installments for past service gratuity, say -what would be the tax treatment for employer contribution to sixth year installment of single premium towards past service gratuity.

Went through the complete article and comments too and saw that many places CTC has been mentioned where employers normally include Gratuity. In my case, employer has included Gratuity as Salary components. Here is how my compensation letter is structured:

Now in this case - 1) Can they deny gratuity, given that it is included as part of salary details, even if one leaves the company before 5 years completion?

2) It seems they are calculating Gratuity based on the current Basic + DA and probably saving it too. Are they still liable to pay the Gratuity on the last salary Basic + DA or can they pay just the sum of this line item (from salary) over the years?

Dear Sir,These days companies include Gratuity in CTC. In case I worked for 5 years and every year my basic increases and accordingly the Gratuity component. In such a case will I be getting gratuity as per my last drawn basic or as per the accumulated gratuity over a period of 5 years?

1. Gratuity is payable only when an employee completes 5 years of continuous service hence you will not be eligible for gratuity if you leave the company before 5 years. Gratuity is part of your CTC and not salary.

2. Gratuity is calculated on last basic drawn and not linked with previous Basic salary components.

I have been working in a company for 5 years and 10 months (inclusive of 6 months break). I took the break about 3 years back and I was in leave with out pay. Once I came back, I continued with same EMP ID, PF account and everything. It wasn't considered as a break of employment. Now if I leave the company, am i eligible for Gratuity, or do you see any possiblity employer brings up the break put an end to the gratuity payment. Is there any Gratuity act to clarify this.

Thanks for informative article. Sir I will be completing 5 years in my current company on 11 Aug 2013, I am getting job offer in other company, so if I resign from my current company on 12 Aug 2013 will I get the Gratuity.? I will be completing 5yrs 1 Day on 12 Aug 2013. Please advice.

Hi Govind,Stumbled upon this great post and discussions around gratuity. Wondering whether you have any suggestions on my case. I have not been able to get a concrete answer till date.Joined this Indian subsidiary of a US multinational IT company in Bangalore in 2003 and left last year while in US. All these years I had been travelling to US, used to stay for a couple of months and go back to Indian base. The US deputation used to transfer the Indian payroll to US payroll (two payrolls never running simultaneously). The total duration I worked only in India was less than 5 years, but the last I was on Indian payroll was Jun 2009 (remember I joined in Jan 2003).Now, how does Gratuity work in this case? I was not surprised when the company refused to pay any Gratuity citing it's policy of not paying any Gratuity to those resigning onsite. I have this feeling this is not right. And if this is not right, I want to pursue it further. Not very sure about Gratuity rules and being in US right now doesn't help in approaching any labour lawyers.Please advise.

Govind Sir,I will be completing 5 years on 11th Aug. HR from other company is saying that as per rule if you complete 4yrs 8 months then also you are eligible for gratuity. I said I will confirm from expert and let you know. Sir, please advice.

Dear SirI have joined a govt psu and have 9 years service. But after initial 3 years of service i have dies non(no work no pay) for 4 days as part of a strike called by unions. Whether the 4 days will be considered as break in service ? So whether I will be getting gratuity for whole 9 years or only 6 years after which i am having 5 years of regular service?

My query is - I've been working in this organization for 4.7 yrs. and about to complete 5 yrs in Dec'13. The concern is When I joined this company,the name of the company was different now company have changed its name in Registrars of Company. My PF Account is same. Will I still be eligible for Gratuity? Also would you want to share any exceptions to this.Your Reply is greatly appreciated.

I was working with a co based in noida, the co size was around 100 employees. I resigned from the organisation in January 2013 after serving them for 5 years and 2 months. On my relieving day i asked the finance dept about my gratuity calculations, and they told me that there is no provision of giving gratuity to the employees even if they have served for more than 5 years. My question, is it really possible for me to get the gratuity amount and if yes what procedure should be followed by me.

I was working for a Bank in Dubai,the Co Size was around 400 -500 employees.I resigned from the Co in Dec 2012 after serving for 4 years and 9 months.As I was being told that I will be receiving the gratuity figures within 30 days from the date of my resignation,it took around 8 months for the Co to pay off my gratuity.

I have not accepted the figures since I have a loan to pay to the bank.Apart from the gratuity figures ,I still have to pay around 2000 dhms to the Bank.

My question,is the bank owes me 8 months interest on my gratuity and if yes what procedure should be followed by me to claim the interest rate.

I worked in a company for 5 years, when i joined in 2008 the company had 9(or may be 10, dont remember) employers. Then for next 2 years it had 15+ employers.. But in last 2 years the count was bellow 10 and when I left the company the count was 9 including me. So company still has to pay gratuity ?

Its been more than 1.5 month since i left that company. I have not got any gratuity yet.. They had told me that they will let me know if it is applicable.. So i wanted to clarify this before contacting them.

Its very informative, you covered it every important points in simple way.

I have a question for you - I have completed 5 yrs as of now in my company which includes 15 months of contract as well. Am i eligible for gratuity? Will the contract period be included in this 5 yrs ?